Stock Market

[Jimplication]

Re: Stock Market

If you max out a Roth IRA each year ($4k max investment) you could easily be a wealthy person by retirement. The money is taxed when you deposit it, not when you withdraw, which adds up, and is certainly nice.

[tenth]

Re: Stock Market

If you max out a Roth IRA each year ($4k max investment) you could easily be a wealthy person by retirement. The money is taxed when you deposit it, not when you withdraw, which adds up, and is certainly nice.

How does that work? Would it not be better to let it compound at a pre-tax amount, and worry about the tax later?

[mjb2124]

Re: Stock Market

I have 2 Roth IRA's. I moved my 401K from a company I used to work for into 2 IRA's and then into 2 Roth IRA's this past year. You can't move directly into a Roth IRA so you have to do the additional paperwork of moving to an IRA and then Roth IRA.

The biggest problem is that I was taxed on all that money this past year...and it wasn't pretty! The Roth IRA acts like additional income for that year. Of course, I'll never pay taxes on it again so regardless of how much it grows, none of it will be taxed.

[mjb2124]

Re: Stock Market

How does that work? Would it not be better to let it compound at a pre-tax amount, and worry about the tax later?

Not really. Say you have 40,000. You put it into a Roth. You'll pay taxes on that 40,000 that year. No matter how large it gets in the future, you won't have to pay taxes on it again.

An IRA acts differently. You'd put 40K in and don't pay taxes on it. When you take it out (say at age 60 when it's worth 200K), you'd pay taxes on that 200K. The taxes on that 200K IRA will surely be much more than the taxes on the 40K Roth.

Hopefully that makes sense.

A Roth IRA is a very wise move for most people saving for retirement down the road.

[p_rushing]

Re: Stock Market

Usually it is better to pay taxes in the future. When you take the money out, you will not have any income, so you will be in a lower tax bracket.

[tenth]

Re: Stock Market

Not really. Say you have 40,000. You put it into a Roth. You'll pay taxes on that 40,000 that year. No matter how large it gets in the future, you won't have to pay taxes on it again.

That's pretty neat. I'm not sure we have an RRSP equivalent to that up here.

I was thinking of it like a regular investment where you'd be paying taxes on the initial investment that you earned with regular income, and then a tax on the interest income at the end.

You still take a little bit of a hit off the hop because if you have x amount set aside for savings, some of it will need to go to taxes right away, but for people pulling their money out in one lump sum when they retire, there should be pretty big savings in the end.

[mjb2124]

Re: Stock Market

Usually it is better to pay taxes in the future. When you take the money out, you will not have any income, so you will be in a lower tax bracket.

That makes sense, but if the Roth IRA (for example) gains a few hundred thousand over 30-40 years, then I'd think that paying the taxes on 40,000 would be much easier to handle then paying taxes on 300K or 400K.

[wxkid23]

Re: Stock Market

Just watch Mad Money

Cramer and Mad Money is an excellent show to watch from an educational standpoint as well. I would generally take his "lightning round" picks with a grain of salt (usually.. not always) though. Try to pay attention to the stocks which he mentions at the beginning of the show, these are stocks in which he has actually done some research. If you wanna take a shot at a stock he recommends, do not go out and buy it the next day, the AH traders bid the stocks up like crazy and usually level out during market hours then proceed to be shorted like crazy and collapse short thereafter. Let the stock cool for a week or two and then find a good entry point.

Curious if any of you made any money off of GME (gamestop) in the last year? That was a low 20's stock last year before the purchase of EB... it shot up to nearly 50 before feeling pressure lately due to PS3 delay. Anyone who doesn't like Electronic Arts would get a kick out of what that stock has done lately.. lol.

[USF11]

Re: Stock Market

Cramer and Mad Money is an excellent show to watch from an educational standpoint as well. I would generally take his "lightning round" picks with a grain of salt (usually.. not always) though. Try to pay attention to the stocks which he mentions at the beginning of the show, these are stocks in which he has actually done some research. If you wanna take a shot at a stock he recommends, do not go out and buy it the next day, the AH traders bid the stocks up like crazy and usually level out during market hours then proceed to be shorted like crazy and collapse short thereafter. Let the stock cool for a week or two and then find a good entry point.

Curious if any of you made any money off of GME (gamestop) in the last year? That was a low 20's stock last year before the purchase of EB... it shot up to nearly 50 before feeling pressure lately due to PS3 delay. Anyone who doesn't like Electronic Arts would get a kick out of what that stock has done lately.. lol.

I actually made made on GME bought at $28 sold at $38, EA has been in a world of hurt lately, not TTWO take-two hurt but close from their standpoint.

[dondada30]

Re: Stock Market

Two books i would recommend to anyone interested in trading/stocks are "Reminisces of a stock operator" and "A random walk down wall street". These are some old school books that can give you a good foundation and peek into the world of a trader and investor.

I was professional day trader for 6 years so I can speak on my experience. The best route i think is what i was fortunate to have. I was funded and trained initially by a firm to trade their capital and keep a percent of my gains. If I had losses and had decided to leave I didn’t have to repay them. There are a lot less firms that offer that but from what i know, the majority are in NYC, chicago and some in LA. Usually the criteria to get the job are good school/gpa and competitive, ie athletic background.

Anyhow training is the most important thing. the toughest thing to deal with as a trader is failure so its easier to deal with on someone elses dime for the most part. The worst trait to have is stubbornness or unwillingness to admit you're wrong. You have to have a game plan and stick to it. I for one never trade off of news or trade IPOs.

The other thing is you have to develop a style that you are comfortable with. This is done through trial and error and reading up on various techniques. I’m primarily a momentum trader and that’s my style. It’s a good style to have as a trader but not necessarily as an investor. As a day trader I could care less about what a company does or what it’s future growth potential is. For an investor those are 2 very important things. Its very important to understand those differences.

Any how I’m rambling but trading can be extremely lucrative but understand that there is no easy way to become a good trader overnight. Do your homework and pay your dues and it can be a very enjoyable experience.

Good luck!

[ESPNdeportes]

Re: Stock Market

That makes sense, but if the Roth IRA (for example) gains a few hundred thousand over 30-40 years, then I'd think that paying the taxes on 40,000 would be much easier to handle then paying taxes on 300K or 400K.

IRA's are great. My wife and I both have one. I'm in school now and take out loans, so I don't really put much in mine, but she's been putting $200 a month in for 2 years (she's 24 now).

From everything I've heard/read starting one early is the way to go.